Welcome to Gevo's Fourth Quarter 2020 Earnings Conference Call. My name is Carmen, and I'll be your operator for today's call. (Operator Instructions) Please note that today's conference is being recorded.

I'll now turn the call over to Geoff Williams, Gevo's Vice President, General Counsel and Secretary. Please go ahead, Mr. Williams.

Geoffrey T. Williams - Vice President, General Counsel & Secretary

Good afternoon, everyone, and thank you for joining Gevo's fourth quarter 2020 earnings conference call. I would like to start by introducing today's participants from the company. With us today is Patrick Gruber, Gevo's Chief Executive Officer; and Carolyn Romero, Gevo's Chief Accounting Officer.

Earlier today, we issued a press release that outlines the topics we plan to discuss today. A copy of this press release is available on our website at www.gevo.com. I would like to remind our listeners that this conference call is open to the media and that we are providing a simultaneous webcast of this call to the public. A replay of today's call will be available on Gevo's website.

On the call today and on this webcast, you will hear discussions of certain non-GAAP financial measures. Non-GAAP financial measures should not be considered in isolation from or as a substitute for financial information presented in accordance with GAAP. Reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures is contained in the press release distributed today, which is posted on our website.

We will also make certain forward-looking statements about events and circumstances that have not yet occurred, including but not limited to projections about Gevo's business development plans and operating activities for 2021 and beyond. These forward-looking statements are based on management's current beliefs, expectations and assumptions and are subject to significant risks and uncertainty, including those disclosed in Gevo's Form 10-K for the year ended December 31, 2020 that was filed with the U.S. Securities and Exchange Commission, and in subsequent reports and other filings made with the SEC by Gevo, including Gevo's quarterly reports on Form 10-Q. Investors are cautioned not to place undue reliance on any such forward-looking statements. Such forward-looking statements speak only as of today's date and Gevo disclaims any obligation to update information contained in these forward-looking statements whether as a result of new information, future events or otherwise.

On today's call, Pat will begin with the discussion of Gevo's business developments, and then Carolyn will review Gevo's financial results for the fourth quarter of 2020. Following the presentation, we will open up the call for questions.

I'll now turn the call over to Pat.

Patrick R. Gruber - Chief Executive Officer

Thanks, Geoff. Hello everyone. I'm going to keep this relatively short today, because tomorrow we're doing another fireside chat. Those who join us will hear that Lynn and I discuss more information around the financing, projects, how to think about them et-cetera. But back to reporting on this year. We had quite a change from a year ago. So I'm going to run through a partial list. Now we sold out the capacity to a large commercial plant using take or pay contracts that are suitable for use in backing of project debt financings. Now these contracts add up to more than 45 million gallons per year of hydrocarbons. That offtake caused us to think bigger sooner. We also paid off all the white-box debt, we advanced the development of our renewable natural gas project. We figured how to make Net-Zero hydrocarbon products by using a mix of renewable energy with our process and of course that's targeted for our Net-Zero plant in - targeted for Lake Preston, South Dakota.

We have $530 million of cash in the balance sheet and no material debt. That money should enable us to develop multiple plant and make the full equity investment in our Net-Zero 1 plant rather than being dependent upon a third-party. We also have the cash in the balance sheet that should allow us the sponsor significant equity investments in future Net-Zero plants such as Net-Zero 2 or Net-Zero 3 projects. We worked with Citigroup to figure out what they have figured out and vetted our potential bond offering that we may use to finance our debt for the Net-Zero 1 Project, that's taking a lot of work to actually work through that and to have a really attractive solution in line we have work to do to get ready for it still.

Now we shut down our ethanol plant and lost money given that the market wasn't very good (Technical Difficulty) focus for us. We've been told by some new investors that they now understand that we aren't an ethanol company, well, that's good, that eliminates confusion. We aren't an ethanol company, we're all about the renewable energy into energy dense liquids, hydrocarbons, Net-Zero footprint.

We developed our customer pipeline, it's grown quite a lot from last year and it's grown even more since, importantly, we proved that we can establish pricing and take-or-pay contracts that works for our customers and ourselves and result in meaningful take-or-pay contracts. These take-or-pay contracts are backed by the balance sheets or letters of credit from our customers, that's a big deal and a big accomplishment.

We announced our Net-Zero 1 Project. This project slated for Lake Preston, South Dakota will produce roughly 400 million pounds per year of value-added protein-rich animal feed, roughly 30 million pounds of corn oil, 45 million gallons per year of energy dense liquid hydrocarbons. These hydrocarbons are dropping gasoline and jet fuel products that when burned have a Net-Zero greenhouse gas emission across the whole of their lifecycle, measuring all the way from capturing the CO2 from the atmosphere, accounting for the farming and agriculture, accounting for all the energy sources, the transportation of the products.

The hydrocarbon products produced at our plant are expected to be more than minus 70 in their carbon footprint score. But when burned as a fuel for transportation, the whole cycle would be Net-Zero according to the leading science-based lifecycle model called GREET that's been developed by Argonne National Lab. So how does it get to Net-Zero? It's all about two things; paying attention to how things are grown that is the growing practices such as low-till and no-till along with precision agricultural techniques for farmers to only apply the chemicals that are needed, not excess. And two, eliminating dirty electricity and fossil-based natural gas from our production processes.

Net-Zero is being designed to be off the grid from dependence on fossil-based energy. We are putting in a water treatment plant that is expected to generate enough biogas to meet the thermal demands of the plant and provide enough excess gas so we can generate about 30% of our electricity with a combined heat and power unit. We plan on meeting the need for the other 70% of our electricity from a related wind project that we're developing with Gevo's energy.

We don't dirty electricity that's typical off the grid in this country, we don't want it. We also expect to use our green electricity to generate green hydrogen for our production processes. We haven't decided yet if we'll make excess hydrogen to take to the marketplace. Our negotiating power has strengthened as well, this means that strategic approach us differently now. We expect that if and when we work with strategics, we'll be able to make a more balanced deal, that's a major change from our previous position when we had or had in our hand.

Yeah several parties are in discussion with us. No, we can't give more detail at this point. So what's going to happen this coming year in 2021? We expect to sign more take-or-pay customer contracts and support Net-Zero 2 and Net-Zero 3. We already have attractive production sites chosen on option for under LOI. We expect to announce the specifics for these sites after we announce the next set of offtake contracts. We expect that Net-Zero 2 and Net-Zero 3 would look a lot like Net-Zero 1. We expect to start construction of our renewable natural gas project with the size of 355,000 million BTUs. This project will take manure for more than 20,000 dairy cows and reverted to renewable natural gas. This project will cost about $75 million, and we project return of more than 30% IRR using conservative estimates.

The project is expected to come online and start generating profit in the fourth quarter of next year. In the near-term, the gas to be sold to the California market, once Net-Zero 1 starts up, we may take a portion of that gas up there to drive the carbon scores either more or maybe we just keep on supplying the California market, that's the future economic optimization question.

In order to close the project finance deal for Net-Zero 1, we need to have the capital cost estimates to the plus or minus 10% or so level. This engineering work and design work is underway, our engineering partners have upwards of 50 people working on our design and capital cost. We are grateful to have the money to do it properly. The capital cost of Net-Zero 1 is currently expected to be about $650 million inclusive of the production plants, water treatment plant and energy complex. On a fully installed project finance basis, the project total would be roughly $800 million because of the interest during construction and the reserves and such that are required to do a debt financing. The IRR for this $800 million project is expected to be better than about 20%.

We need to get the engineering design work done and pin down the capital cost to be corporate precision to enable the debt financing of Net-Zero 1, that's the prerequisite, we have to know what it is plus or minus 10% before we could do a debt deal. This will take to the end of 2021 to complete and get it right. We'd expect to close a bond deal in the first half of 2022. It's possible that the capital cost of Net-Zero 1 Project to go up or down depending upon adjustment, the scope of equipment cost or what we work through in the design of that plant.

Well, that's what all this design work is about right now, pinning down the capital cost to the very best optimal processes that deliver the returns we want. Net-Zero 1 is expected to take about two years to build, this is normal, it's a big capital deployment, one good thing is that the engineering design cycle for Net-Zero 2 and 3 could be much, much shorter. We expect that those plants will be based upon Net-Zero 1.

It shouldn't be lost on anyone that our business is significantly derisked. We have money to execute our plans in a real sense, yeah. It's quite a change from last year. Last year, we had to raise money to keep the lights on. Our team did well, developing the business, advancing the technology. Now if we raise more money, the purpose will be to take more of the large cash flow streams we expect from our Net-Zero Projects or from an R&D project.

Tomorrow Lynn Smull and I will be doing a fireside chat with Water Tower Research, but we will be discussing project economics and financing for both Net-Zero 1 Project and the LNG project. We will be answering whole bunch of investor questions. Information on registration can be found in the Investors section of our website, investors.gevo.com.

Now I will turn the call over to Carolyn, who will take us through the financials. Carolyn?

Carolyn M. Romero - Chief Accounting Officer

Thank you, Pat. Gevo reported revenue in the fourth quarter of 2020 of $0.5 million as compared to $6.9 million in the same period in 2019. During the fourth quarter of 2020, hydrocarbon revenue was $0.4 million compared with $1.0 million in the same period in 2019. Hydrocarbon sales decreased because of the lower shipments of finished products from our demonstration plant at the South Hampton Resources, Inc. facility in Silsbee, Texas. During the fourth quarter of 2020, revenue derived at the Luverne Facility from ethanol sales and related products was $5,000 compared to $5.9 million during the same period in 2019. As a result of COVID-19 and in response to unfavorable commodity environment, we terminated our production of ethanol and distillers' grain back in March of 2020, which resulted in lower sales for the fourth quarter.

Cost of goods sold was $2.0 million in the fourth quarter of 2020 versus $9.4 million in the same period in 2019. Cost of goods sold included approximately $0.9 million associated with the production of AIBA and related products and maintenance of the Luverne Facility and approximately $1.1 million in depreciation expense. Gross loss was $1.4 million for the fourth quarter of 2020 versus $2.5 million for the fourth quarter of 2019.

Research and development expense increased by $1.7 million during the fourth quarter of 2020 compared with the same period in 2019, due primarily to an increase in consulting and personnel expenses. Selling, general and administrative expense increased by $0.2 million during the fourth quarter of 2020 compared with the same period in 2019, due primarily to an increase in consulting and personnel costs offset by a decrease in Investor Relations and marketing costs.

For the fourth quarter 2020, we reported a loss from operations of $7 million compared to $6.2 million for the same period in 2019. In the fourth quarter of 2020, cash EBITDA loss, a non-GAAP measure that is calculated by adding back depreciation and non-cash stock-based compensation to GAAP loss from operations was $5.1 million compared to $4.0 million in the same quarter of 2019.

Interest expense for the fourth quarter of 2020 was $0.5 million, a slight decrease compared to the same period in 2019 as a result of lower amortization of original issue discount and debt issuance costs and the conversion of $2.0 million of 2021 notes to common stock during July of 2020. During December 2020, we converted the remaining $12.7 million of 2020-'21 notes in the common stock.

For the fourth quarter of 2020, we reported a net loss of $18.1 million or a loss of $0.15 per share based on a weighted average shares outstanding of 120,017,120. This compares to a loss of $6.8 million in the fourth quarter of 2019 or a loss of $0.50 per share based on weighted average shares outstanding of 13,659,944. During the fourth quarter of 2020, we incurred a $1.4 million non-cash loss related to the conversion of $12.7 million of 2020-'21 notes in the common stock.

During the three months ended December 31, 2020, we recognized a non-cash loss totaling $8.6 million due to changes in the fair value of our 2021 notes embedded derivative liability, resulting from the increase in the price of our common stock prior to the conversion of the $12.7 million of the 2021 notes. Adding back these non-cash losses resulted in a non-GAAP adjusted net loss of $8.1 million in the fourth quarter of 2020 or non-GAAP adjusted net loss per share of $0.07 based on a weighted average shares outstanding of 120,017,120. This compares to a non-GAAP adjusted net loss of $6.8 million in the fourth quarter of 2019 or non-GAAP adjusted net loss per share of $0.50 per share based on a weighted average shares outstanding of 13,659,944.

Now I will turn it back over to Pat to wrap things up.

Patrick R. Gruber - Chief Executive Officer

Thanks, Carolyn. Let's open up the call for questions. Operator?

Question & Answers

Questions and Answers:

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Operator

Thank you. (Operator Instructions) Our first question is from Amit Dayal with H.C. Wainwright. Your question please.

Amit Dayal - HC Wainwright - Analyst

Thank you. Hi Pat. Good afternoon everyone. Appreciate you taking my question.

Patrick R. Gruber - Chief Executive Officer

Hey, how you doing?

Amit Dayal - H.C. Wainwright & Co., LLC - Analyst

Good. Thank you, Pat. So I've saved some of my questions around the project for the call tomorrow. But just in terms of the timeline you've highlighted, one first half of 2022 for the financial of Net-Zero 1. Is this sort of a typical timeline for something like this and could this potentially be accelerated if things fall in place for you as you expect?

Patrick R. Gruber - Chief Executive Officer

I would say that the critical timeline runs through getting engineering estimates done. We had to know what the capital cost is asking for in terms of debt support. You got to have that pin down, you can do a debt financing. We also have to have a bunch of the permitting stuff done and all kinds of things. That timeframe to get that stuff done, we're working on getting it done by the end of this year, and in which case, then we should be able to do the bond offering in early part of next year. But because that's talking about a year from now or it's actually could be - it could be less of year from now, right. But there's - because it's so far out, there's uncertainty around it, so the lawyers advise need to give it a wide range first half of the year, boom, that's the answer. I would - do I want it sooner? Hell, yeah, I want it sooner. I want it done. And I'm the most of patient person on earth when it comes to it.

Amit Dayal - HC Wainwright - Analyst

Understood that. Thank you for that. And then our model currently for Net-Zero 1 has some level of utilization coming online by 2024, is that a reasonable assumption?

Patrick R. Gruber - Chief Executive Officer

Amit, say that again. I missed the first part of the question.

Amit Dayal - H.C. Wainwright & Co., LLC - Analyst

Yeah, I was just saying, our financial model right now that is published publicly we have you doing some of - some level of utilization from Net-Zero 1 coming online by 2024. Is that still a reasonable assumption?

Patrick R. Gruber - Chief Executive Officer

It is. That's the right assumption.

Amit Dayal - H.C. Wainwright & Co., LLC - Analyst

Okay, perfect.

Patrick R. Gruber - Chief Executive Officer

Yeah. So in other words, even if we finance in the first half of the year, we still plan to get the plant online in 2024. We've obviously built ourselves some slack in there. And this is one of these things where you'd say you've got to do the design right and get it right that allows you to plan right, secure equipment properly, it could be that we could build things in modules which shortens some of the construction timelines, that's the sort of stuff figuring out. But yeah, we are aiming at that first part of 2024 like you have in your model.

Amit Dayal - HC Wainwright - Analyst

Okay, understood. And then with respect to Net-Zero 2 and Net-Zero 3, I mean you're obviously considering those options right now, but is this - tragedy on this probably comes in 2022 or could we see more clarity on progress around these efforts earlier than 2022?

Patrick R. Gruber - Chief Executive Officer

I would expect that we have progress in 2021 on those things. So we'll get the contract signed, work the sites and I would expect to have the Net-Zero 2 site and customers announced in 2021. And do I think we can get a Net-Zero 3 in that time frame? I think it's pretty much probable. Now we all heard Tim Cesarek talk if you were still on the fireside chat. He throughout the number up, he can see us doing six plants in short order. Well, that's true, but we got to go through the work in duty. So I can see us having multiple plants in play at the same time. That's not - these the firms we're working with on the engineering side and constructing side, they're capable of execution on that kind of scale. The trick is you've got to get that design right because it leverages over into the Net-Zero 2 Net-Zero 3, we can't be changing things, we're messing around with things, people are often asking why not just take over an ethanol plant. Anybody know where the pipe diagrams are for that plant and it's like we got to go learn that, are you kidding me, that's each one is individual and different. What we want to do is make it as cookie cutting as possible so we can accelerate these timelines, that's what we're shooting for, and we're pretty stubborn about it because we think it is the best way to generate the most cash for the company over the long run, because we want those cash flow streams, they're worth lot of money.

Amit Dayal - H.C. Wainwright & Co., LLC - Analyst

Understood. And just looking at the burn rate for 2021, what could should we - in terms of all these efforts that you're putting in place to get the permitting and engineering et cetera done? Maybe what should be the burn rate for 2021 that we should think about?

Patrick R. Gruber - Chief Executive Officer

I think for the burn rate for Gevo Inc. is in that $25 million-ish range, something like that, and then we'll have project stuff that's capitalized and that will show up differently as a cash number. We'll have to give guidance on that I suppose at some point, but it's kind of your normal project stuff that's in that kind of a bucket. But cash burn to do the development, the resources to add. We're adding staff for example and more people to go do things, that would show up, we wind up with probably $25 million, $26 million burn at the corporate level. So that's the GSA R&D including the engineering stuff. The actual corporate engineering. Project stuff, permitting project focused work, that's all going to be in a capitalization bucket for the project through development expense.

Amit Dayal - H.C. Wainwright & Co., LLC - Analyst

Understood. Yeah, just one last one from me, Pat, on the renewable natural gas opportunity, the initial efforts seems to me just for your upcoming facility and your own consumption et cetera to lower your carbon intensity, but could this develop into a larger sort of ambition for the company in terms of actual revenue scaling beyond what your efforts are?

Patrick R. Gruber - Chief Executive Officer

That's a very interesting question, very insightful question actually, because what's happened is that we start working on the LNG project in Northwest Iowa because we are thinking about putting that RNG over to Luverne. But the demand for our products outgrew the scale of Luverne and we would had our - we do a whole bunch of permits and all kinds of stuff that would have dragged out our timelines.

So we started thinking about that greenfield plant on Net-Zero 1, and as we started thinking it through, we realized we could make Net-Zero 1 energy sufficient, generate our own biogas on site. Well that diminished the need for that Northwest Iowa RNG. On the other hand, we had already done a whole bunch of the development work. The way we think of it is this, we learned how to - so in this last 18 months, we learned how to be developers for renewable natural gas. We are going into the renewable natural gas business, that's just a fact. We're going to be doing that. This 355,000 million BTUs is initially going to go to California. That's where we going to sell it. There'll be a time in the future once the Net-Zero plant starts up or maybe when we start delivering backup or maybe we get to our Net-Zero 2 or 3 site, we can use that natural gas there too, if we need to. So it gives us optionality that I kind of like, but it shouldn't be lost on anybody that we do in fact have the capability to develop projects where not everyone can, and we see how to get it done and how to monetize it. If we sell to California, in which we plan on doing in early days, good. The plants paid back right quick, that's really attractive and then that's a good thing.

So it's one of these very interesting games, when I think the Gevo, I think of renewable energy transformed to energy dense liquids, that's no joke. We're wiping out the fossil-based footprint by displacing fossil natural gas - fossil-based natural gas, more of its better. We could actually drive - if you took that gas up to Net-Zero 1, we could make up a large negative greenhouse gas emission liquid transportation fuel, that's kind of astounding.

Amit Dayal - H.C. Wainwright & Co., LLC - Analyst

All right. Understood. That's all I have Pat. Thank you so much and see you on the call tomorrow.

Patrick R. Gruber - Chief Executive Officer

Sure.

Operator

Thank you. Our next question comes from Poe Fratt with NOBLE Capital Markets. Your question please.

Poe Fratt - Noble Capital Markets - Analyst

Yeah. Good afternoon, Pat. So if I just get one quick one out of the way, what's your current share count right now?

Patrick R. Gruber - Chief Executive Officer

I believe it's a 198 million shares.

Poe Fratt - Noble Capital Markets - Analyst

Okay. So it hasn't changed much since the end the January. And then…

Patrick R. Gruber - Chief Executive Officer

No, it hasn't changed at all since the end of January.

Poe Fratt - Noble Capital Markets - Analyst

Yeah, no. I think of maybe some of the might have exercised, because I think you still had some warrants out there. Right?

Patrick R. Gruber - Chief Executive Officer

Yeah. What the number that I have is still the same old number on my slides that show up to Carolyn.

Carolyn M. Romero - Chief Accounting Officer

Yeah, it is the same.

Patrick R. Gruber - Chief Executive Officer

It is the same.

Poe Fratt - Noble Capital Markets - Analyst

Okay. Excellent. And then on the R&D Pat, you said $70 million to $75 million is for CapEx, have you - and you working on the financing, have you figured out is it 70%-30% as far as debt-equity and how much equity are you going to end up putting into that plant?

Patrick R. Gruber - Chief Executive Officer

Okay. We're going to talk about this tomorrow at the fireside chat, but here's the previews. We don't have to put any more cash into it. We already did the development work, it's like we're going to get a rebate so to speak, and that when we close that deal, we'll get money back. So it's already kind of a done deal and the financing is arranged, and we'll be talking more about that tomorrow when Lynn on here, he's the guy who did a great job getting it all organized to get it financed. And so that cash flow should be - we should be seeing that - it will be meaningful cash flow by the fourth quarter. We'll start seeing some of that early next year, but construction starts like - we're going to break ground, why like it's getting organized right now, getting organized. So it's very, very soon we'll be breaking around. We'll do an announcement and what to see what kind of ribbon-cutting ceremony and stuff like that or groundbreaking ceremony and things like that. But it's a - Lynn's done a great job of getting it all organized. Chris Ryan has done a great job at figuring how to do development of RNG and get it done. It's good different business opportunity for us.

Poe Fratt - Noble Capital Markets - Analyst

Yeah. Just two quick words, would any - do you have an estimate on how much cash you might be able to get out of that once the financing is done? And then also the start-up, is it first quarter of 2022 or fourth quarter of 2022?

Patrick R. Gruber - Chief Executive Officer

It'll start up. Hello, who is that?

Lynn Smull - Chief Financial Officer

That's Lynn, sorry.

Patrick R. Gruber - Chief Executive Officer

Go ahead.

Lynn Smull - Chief Financial Officer

Yeah. We'll will start up in first quarter, but the cash is a little bit back end loaded because of the way the LCFS credit system works, but we were expecting cash distributions out of the project in the order of $10 million on very conservative assumptions around carbon score and in the cost to complete. We think we can do a lot better on the capital cost.

Patrick R. Gruber - Chief Executive Officer

What's the range of outcomes do you think? I know we took a really conservative approach as we did it for ourselves because we're thinking about really long-term and how to use it with Net-Zero plant, but we just sold to California and it all worked well, what's that $10 million turn into?

Lynn Smull - Chief Financial Officer

Well, it's really - the range is about $9 million to $16 million depending on the carbon intensity score. And the returns can vary from 30 to the high 60s depending on those things as well as the CapEx.

Patrick R. Gruber - Chief Executive Officer

Does that help you, Poe?

Poe Fratt - Noble Capital Markets - Analyst

Yeah, no, and I think you'd had like $20 million in it or you'd about $20 million outlays before everything?

Lynn Smull - Chief Financial Officer

We don't need to put any more cash into it, because we've already spent about $8 million on the development, including equipment and engineering and such. And we'll pull that back out and the only - we have zero net cash coming out off of the balance sheet to complete the construction of the RNG project.

Poe Fratt - Noble Capital Markets - Analyst

Okay, great. And then can you give me a budget for your FEED work, either a cost estimate or a budgeting on how much you're going to spend on the FEED work?

Lynn Smull - Chief Financial Officer

For Net-Zero 1 that's $15 million.

Poe Fratt - Noble Capital Markets - Analyst

Okay. And then Pat it was helpful you gave sort of the soft costs and the hard costs, the hard cost of Net-Zero 1 over $650 million and then soft costs have been $150 million as it stands right now and you need to get that cost estimate to plus or minus 10%. Are you currently at plus or minus 50%, I saw a footnote on your presentation that said it was plus or minus 50%? Can you help me reconcile that goal versus where you are now?

Patrick R. Gruber - Chief Executive Officer

Yeah. So we're doing a - it's a - different parts of the process are at different status. So we changed - as we started thinking about how to build out Net-Zero 1 and get ourselves off the dirty fossil footprint of energy. We're realizing what's that you throw water treatment plant in, well, we got to go do that figure that out, so that's got and then how do you integrate, where do we - what's the best way to maximize the protein and oil, so we've worked on a deal there with a partner we'll announce later and had to figure that out. And so what we do is we say things like that and it's plus 50% some parts of the process already are pretty well nailed down, other parts were still going. Is it this chunk like this and where does that lay out and how does it interact with the rest of it.

So it's the putting of the pieces together that creates the uncertainty and to get it right, but we also - the real - we have to - this is actually the work entails actually getting bids on equipment and figuring out the real cost, that's a non-trivial thing because it's a giant plant. So that has to be done as well. So it's a mixed bag is what we got here, and the trick of it is that we want to keep - we pin down the scope, that's good, that's extremely helpful. We had inside our battery limits, inside our battery limits for everybody listening means, that's inside - think of it as inside our fence line under our control, part of the plant, part of the build. Things that are outside the battery limits would be things external to us, we could - there still might be some costs we have to pay attention to, for instance, we'll be doing a wind farm in partnership with (inaudible) energy. But that's separate with different financing. The insider battery limits, while we got a water treatment plant, we got a protein plant, we got - we're going to be taking out vegetable oil, large amounts of it, we want all that stuff because that offsets the acquisition cost of corn, right. It's correlated so internal hedge kind of thing it's worth a lot of money. And then we've got the hydrocarbon stuff, we're partnered with Axens on much of that because they've built a whole bunch of these kind of plants, we take the hydro - petrochemical based butadiene into hydrocarbons. Well, that's real similar to what we're doing except for we're starting with isobutanol, you got to make isobutanol - isobutylene once you go from there, then it works well great, they've done 120 of these plants before what, call it, sorry, 25 of these plants before. So that's all good.

So it's all about putting all the big pieces together and figuring it out and it just takes time and that's where we're at. So it's not a - well we're at this part is - it's not - different parts of different places we're going through.

Poe Fratt - Noble Capital Markets - Analyst

Okay. And maybe I'll ask a cash burn question a little bit differently and just what - have you determined how much extra equity you're going to put in Net-Zero 1, what that figure is actually going to be or is it still moving target because of the capital cost estimates have been completely finalized?

Patrick R. Gruber - Chief Executive Officer

We just - at the CEO level, I just simplified say we're doing 100% of the equity at Net-Zero 1 unless someone makes us one hell of a sweet deal, and then which case we share that cash flow stream. Now remember we're greedy, we view that cash flow stream is roughly $100 million a year of EBITDA at the project level. And so why would we share it. And I get that people a strategic would add value. Yes and no, it depends on what the deal is. And so I'm liking it like this. I live in Colorado and I'm baker, I'm baking a cake at high altitude, it's tricky. I got all my ingredients. I don't need extra cooks in my baking kitchen right now, helping me bake. You want to put frosting on after the thing is baked, hey, welcome to it, we'll look at it, see what the deal is at that time. And so it could be that we do add additional people into the mix of equity prior to close, it could be that we do and we're going to want to look at that very, very carefully. But you're getting into early than that you got too many cooks in the kitchen and that's not - that's how you ruin timelines. So I like where we're at on that front.

Now Lynn you can give a little more example of what you're thinking about what you've modeled.

Lynn Smull - Chief Financial Officer

Sure. The debt work that we've done with Citi has been pretty exhaustive to confirm that we can qualify for a private activity bonds issuance. That's a tax-exempt bond issuance. Those markets are very attractive for the types of projects that we are sponsoring the at Net-Zero 1. We expect to be somewhere around two-thirds of leverage. At the end of the day, we're expecting that we could be putting in somewhere or in the neighborhood of $250 million of equity, if we invest 100% of the part - of the equity in that project. And I'd also note that the returns that Pat cites are oftentimes not giving credit to a range of fee that we would not charge to the project before a 100% equity. If we're partial equity we'll charge for licensing fees, operations and maintenance fees, project management, certain overhead recoveries. If we're 100% equity consolidated those fees only come to Gevo and add to the IRRs that are being cited.

Poe Fratt - Noble Capital Markets - Analyst

Great. That's helpful Lynn, and that is - that $250 million equity, that is the 2022 event, right. So it's you…

Lynn Smull - Chief Financial Officer

It's right.

Poe Fratt - Noble Capital Markets - Analyst

Do you have an idea sort of where do you think you will end the year 2021 from a cash perspective, you have $531 million now? Do you have an idea of sort of what you think your cash on hand or on the balance sheet will be at the end of this year?

Lynn Smull - Chief Financial Officer

Well, that - I'll just say that we're budgeting the development of Net-Zero 1 as though we are going to complete it and close financing at the end of 2021. That won't happen, but that's the way we're budgeting and it's including long-lead equipment of deposits to maintain that completion schedule that Pat cited earlier in 2024, we're going to probably have about $45 million out the door that will recover when we close the financing of Net-Zero 1.

Poe Fratt - Noble Capital Markets - Analyst

Yeah, okay.

Patrick R. Gruber - Chief Executive Officer

So if you do not cash then, you'd add it up and say, well, we told you it was going to be $50 million to do the feed engineering, right. We told you we'd lay out probably - we budgeted for $45 million outlay, which we may or may not do, but that's we budgeted for capital equipment long lead items. And then we told you that it's like $25 million, $26 million of corporate related expenses and all of the other work. So that's the kind of numbers attractive off of $530 million. That's the kind of the number you'd line point upwards.

Poe Fratt - Noble Capital Markets - Analyst

That's really helpful. What - is it $15 million on the feed or $50 million, sorry?

Patrick R. Gruber - Chief Executive Officer

$15 million.

Poe Fratt - Noble Capital Markets - Analyst

$15 million, 1-5. Okay, great.

Patrick R. Gruber - Chief Executive Officer

Yeah. And then one clarification, I want to make that's - what you asked about that is the phase and stuff and design is that of course this design when we're talking about it this way is it's about of classes of design, it's about going through the details, the mass and energy balances, these are engineering exercises to figure it out. We're optimizing the process along the way, right, because we want to minimize the carbon footprints, we maximize the carbon score that we get. That's how we make the most money.

So you go through would look at - in the design phase, you go through and look at every single unit operation and ask, is this the right one, does it have the right horsepower on that engine for that that motor, is it the right pipe size, is the detail, detail, and put it all together and then you got to source the equipment and come up with it, that's why it takes so much work. And so when we talk about it, we talked about a cat as engineers to each other here a few minutes ago, but other people listening might not grasp that of course we have a process design, it's about pinning down the exact detail so we can spend money to go buy it, this stuff doesn't come off the shelf, so anyway.

Poe Fratt - Noble Capital Markets - Analyst

Okay, great. And then I think Pat before you - on R&D project you have been sort of saying that the offtake customer might be somebody who would be recognizable on that would be sort of significant move, is - are you prepared at this point to talk about that or is it - are you - will be - have to wait until be the financing finalized?

Patrick R. Gruber - Chief Executive Officer

Yeah. That will be a - we got to finalize that contract. So selling - renewable natural gas is worth a lot of money in California right now. So again just to confidence just move ahead on the project anyway and then we'll announce that customer partner when we're ready here.

Poe Fratt - Noble Capital Markets - Analyst

Okay. And then just couple more if you wouldn't mind, it looks like you've identified sites for Net-Zero 2 and 3 and then along the lines, one intriguing thing to me was that you added a site on your map in Florida, can you talk about Florida from the standpoint of…?

Patrick R. Gruber - Chief Executive Officer

Yeah, sure. So what's happening to us is that, as the demand increases, now remember, we're dealing with people under confidentiality agreements, right. So our customers all talk to us under confidentiality agreements and then other partners talk about us - talk to us under confidentiality agreements, we're always restricted in what we can say. However, corn in the Midwest is a sustainable low-cost way to get these carbohydrate residuals that we can turn into our hydrocarbon products and we also have good wind resources up there, we had good biogas resources up there. It makes sense, stuff makes sense up in the Midwest.

In Florida, there are several feedstocks that have potential interest there's molasses type things and there is sugar residues from various types down there. And so people have approached us with sites and so we have - we're going through the work to evaluate them. You'll see them in other places that popped up on our map too, where a same kind of thing, where people are saying, hey, we could supply you with carbohydrates, would you want to build a site and we say yeah you show me the sustainability, you show me the cost, you show me the risk associated with that - acquisition of that carbohydrates source and we'll look at it. But the one in Florida has risen to the rank of we got to evaluate it so it shows up on our map.

Poe Fratt - Noble Capital Markets - Analyst

Okay, great. And then could you help me understand the significance of the MoU that you signed with HCS and how that fits into the overall plan?

Patrick R. Gruber - Chief Executive Officer

Yeah. So - okay, so with HCS, that's Haltermann Carless. Haltermann Carless is especially a fuel manufacturer that we announced a deal with them where we would be licensing our technology to them for production of hydrocarbons inspired Germany. And using - deleveraging their site. Now we will work with them to a range the isobutanol production in Germany or somewhere along the Rhine River presumably or somewhere in Europe. We start to go do that work. They - you will notice in that press release we'd talked about jet fuel in Germany, okay, and it talked about the size of the project, we'll co-market it to them because we're real particular about how you place to stuff in the market and whole it sustainable all the rest. So think Net-Zero concept in Europe.

The difference in Europe is that you don't have to have the isobutanol plant next to the hydrocarbon plant, they can - for instance, you can float the stuff down the Rhine River. In the U.S., you can't do that, of course, because you don't get the credits for it, the EPA requires the plants to be integrated in order to get the RFS credits, the rates. So there we can do stuff like that and separate maybe someday here we can separate things, but there stuff seems to be economical in a work and it's jet fueling in Germany.

Poe Fratt - Noble Capital Markets - Analyst

Great. That's - you just mentioned one thing that actually I wanted to bring up, when prices are going through the roof it seems like - can you help me understand whether that impacts any of your development plans?

Patrick R. Gruber - Chief Executive Officer

Impacts our development? Yeah development plans, I mean broadly.

Poe Fratt - Noble Capital Markets - Analyst

Yeah plans just broadly or does it have any (Multiple Speakers) your strategic outlook, I mean…

Patrick R. Gruber - Chief Executive Officer

What we do is we tend to do like averages and futures types calculations when we're looking at our own economic projections, but reprice goes up that's good for us. So the way to think of our business, we win if anything greening goes up in value, RIN's, LCFS, tax credits, we win, that's just more margin to us, right. And oil price goes up, we win, if corn price goes up, what's interesting about that is protein price goes up and so does the oil price. And so that - that's why I need such a clear cut, it's not a loss and it might even be a win depending upon exactly how it happened and under what circumstance.

So it's one of these very interesting dynamics that we have, we've tried to derisk the project on all those fronts. But on the RINs, we get 1.6 times the RINs mean, I mean this is again one of the nuances of making an energy-dense liquid. We have 1.6, ethanol gets 1, why? We're energy-dense. So we get 1.6 times. So that matters. So when you see these RIN prices going up through the rough now multiplied by 1.6, that's what we would get credited to us, so it matters.

Poe Fratt - Noble Capital Markets - Analyst

Great. Thank you so much. And I look forward to tomorrow's presentation.

Patrick R. Gruber - Chief Executive Officer

Sure.

Operator

Thank you. And we don't have any further questions in the queue. I would like to turn it back to Pat for his final remarks.

Patrick R. Gruber - Chief Executive Officer

Thank you all for listening to us. So these are - and join us for the fireside chat tomorrow, we'll be asking Lynn a bunch of questions and Shawn Severson will be moderating, but I can't help myself and also Lynn, I know. Thank you for your support of the company. Appreciate it. We are off to a good start of this year, things are working and making progress. It's actually - it's a change and a blessing from last year. And now we are driving to get this done and get this plant online, Net-Zero 1 and I want Net-Zero 2 and I want Net-Zero 3 as well. So I want that R&D done and we're going to be evaluating whether to make it even bigger. So that's what we're focused on. Thanks for listening today. Bye.

Operator

Thank you ladies and gentlemen for your participation in today's program, and you may now disconnect. Have a great day.

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